Not so long ago, Justin Trudeau’s energy strategy looked so simple. It rested on a Grand Bargain. Canada would build a pipeline or two, and the citizens would do penance in the form of carbon taxes that would reduce greenhouse gas emissions. Everybody –environmentalists, the oil industry and right-thinking Canadians – would be happy.
Today, that bargain is looking mighty shaky. Opponents of Trans Mountain aren’t interested in it. Alberta’s Premier, Rachel Notley, will probably lose her job next year because she has delivered carbon taxes but no pipeline. Her nemesis, Jason Kenney, is planning to abolish the carbon tax as soon as he beats her (as is likely). He points out that it has utterly failed to secure a social licence for pipelines. “Very expensive political theatre for Albertans,” he calls it. And now, the anti-carbon-tax crusader Doug Ford could well become premier of Ontario. It’s hard to see how Mr. Trudeau will impose his grand bargain on the provinces if Alberta and Ontario are in open revolt.
So what about the rest of us? Liberals, environmentalists and economists tell us carbon taxes are a virtually painless way to get us to act virtuously, by cutting down on fossil fuels. They are a good tax. Unfortunately, too many of us don’t like them anyway. As Mr. Ford likes to say whenever he has a chance, “A tax is a tax is a tax.”
Carbon taxes are allegedly revenue-neutral because the money is returned to taxpayers in the form of rebates or offset by lower taxes elsewhere. But the reality is different. In fact, governments can’t keep their greedy mitts off the money. Even the model province of British Columbia is now diverting part of its provincial carbon tax to fund tax credits for preferred groups, such as filmmakers. In Alberta, only about a quarter of the amount raised by the carbon tax is rebated to taxpayers. Sadly, there is a vast difference between the pure world of economic models and the grubby world of politics.
Another problem with carbon taxes is that you can’t possibly make them high enough to be effective. If you did you’d be voted out of office. Mr. Trudeau’s national carbon pricing scheme would start at $10 a tonne, going up to $50 by 2022 – enough to be a nuisance, but not nearly enough to affect consumer behaviour in any meaningful way. Achieving real behavioural change, environmental economists say, would cost many times more. According to Simon Fraser University economist Mark Jaccard, carbon taxes can only have real impact if governments also introduce a bunch of costly and heavy-handed regulations.
In other words, carbon taxes can’t save the planet. Despite what politicians tell you, they basically amount to useless virtue-signalling. But Mr. Trudeau, Ms. Notley and Environment Minister Catherine McKenna aren’t going to tell you this because they want you to believe they have a plan and that the plan will work.
As the date for Mr. Trudeau’s carbon tax gets closer, taxpayers might start asking an even more basic question: What difference will this make in the big scheme of things? As India and China and the whole developing world increase energy use, and the United States extracts more fossil fuel than ever in its history, why are we getting this darn tax?
There’s no good answer for that. The gap between reality and our intentions is unfathomably vast. To avoid the most serious effects of global warming, we should be adding about 1,100 megawatts of clean-energy capacity a day – equivalent to one nuclear power plant – according to the the MIT Technology Review. What we’ve actually been adding: 151 megawatts a day, according to a 2003 study. The technologies that are needed to cut emissions deeply simply haven’t been developed yet.
“[V]irtually all sober analyses conclude that the target [of two degrees of warming] is now unobtainable,” climate expert Ted Nordhaus wrote in Foreign Affairs. But don’t blame venal politicians or evil industry. The root of the problem is much more basic, he argues: “Decarbonization is hard.” He calls the insistence that we can meet the 2 C threshold a dangerous delusion that distracts us from what we can do to address the changes that are coming no matter what.
None of this is a rationale for doing nothing. We should be doing a lot, on many fronts, to develop the breakthrough technologies that will really make a difference. Forking over billions for government to use however they like does not strike me as part of the solution.